The Week

published at The rise and fall of hemlines may be watched by many, but there is a greater interest in a different kind of rise and fall—that of the Sensex. OK, Nifty, too!

The northward and southward movements of the market indices are attributed to many things—the overall health of the economy being the most widely talked about and the foreign institutional investments being another, almost in the same breath.

M.R. Venkatesh, a Chennai-based chartered accountant who passionately tracks the economic governance of India, predicted in his 2007 book Global Imbalances and the Impending Dollar Crisis the global economic downturn that followed. Never mind that Professor Raghuram Rajan has overtaken him in the public perception of being the man who knew what was going to happen before the recession actually hit us on the face.

Now, in his book Sense, Sensex and Sentiments, Venkatesh takes readers through a road flanked by evidences to a point that would interest most Indians. Is it the foreign institutional investors or foreign indirect investments of the rich and mighty of the land that are responsible for the market volatility? Through a series of events that have been in the public domain, he reasons that the wealth first taken out of India through the hawala route has been pushed back into the Indian economy through the tax haven participatory notes (PNs) routes, with SEBI and other regulators not having a clue about who the ultimate beneficiaries of these PNs are.

Logically building up the nexus between crime, corruption and the capital markets, the author says “India may well be compelled to lead the global movement against tax havens”.